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Is OTT Killing The Business of Traditional Cinema?

MARCOM Business | Is OTT killing the business of Traditional Cinema?
Call it the beginning of a new-age era or end of the glorious movie-making era, the impact of #coronavirus on the world is unprecedented. The loss incurred due to OTT will be in #billions of dollars for any movie fraternity even with a conservative estimate.

Call it the beginning of a new-age era or end of the glorious movie-making era, the impact of coronavirus on the world is unprecedented. The loss incurred due to OTT will be in billions of dollars for any movie fraternity even with a conservative estimate.


OTT platforms have been gaining popularity in recent years. They have, especially, seen a sharp surge in their viewership since March 2020 when countries worldwide invoked lockdown.

Netflix added 15.8 million subscribers in the first 6 Months of 2020, more than double the 7.2 million that were expected. With a growth of more than 22 percent year over year, Netflix now has over 182 million subscribers worldwide.

Other OTT platforms likes of Amazon Prime, MX player, Disney Hotstar, and VOOT Select, also saw a major surge in subscribers. This highlights a fundamental change in the behaviour and consumption pattern of the new age world. As the name OTT suggests, it brings content directly to the consumer at his home.

The loss incurred due to OTT will be in billions of dollars for any movie fraternity even with a conservative estimate. Call it the beginning of a new-age era or end of the glorious movie-making era, impact of coronavirus on the world is unprecedented. It has spared no one and no business. The world crisis is a crippling blow for the industry and no one can predict how much time will it take to be back in throttle mode.

According to a research conducted by KPMG, data suggests that there has been a consistent increase in digital consumption in last few months of 2020. Although earning money through these platforms is a big challenge. OTT platforms mainly raise revenue through advertisement. But with all major industries reeling into recession, this revenue has seen a sharp decline. Consequently, allegedly some OTT players are opting for budget cuts.

The biggest advantage of OTT platform is the vast variety of content they offer – Form Oscar winning movies to new releases like Baaghi 3; To old classics like Mughal-E-Azam and all-time series like Friends. OTT has also attracted vernacular audience as it also streams regional content in many different languages making it perfect for consumers worldwide.

The lockdown has forced movie theatres and malls to remain shut. As a result, many production houses have begun releasing movies directly on OTT platforms, like Amitabh Bachchan & Ayushmaan Khurana starrer ‘Gulabo Sitabo’ due to release on Amazon Prime  on June 12 2020. Similarly, Vidya Balan starrer ‘Shakuntala Devi’ and Akshay Kumar starrer ‘Laxmi Bomb’ are also rumoured to be released on OTT platforms if situation doesn’t change. Hollywood series ‘Trolls World Tour’ is also set to be released on OTT platform.

However, this decision has not gone well with owners of multiplexes. One of the biggest multiplex chain, AMC, has released an official statement condemning the action of Universal Studios and has decided not to release any movies of their movies in future. Even in India, all multiplex owners have expressed major disappointment for the decision to release movies directly on OTT platforms.

It could still be premature to assume that cinema halls, one of the oldest forms of group entertainment, will not be making a comeback after the lockdown is lifted. Cinema is all about experience – A movie like ‘Avatar’ changed the movie business with the kind of cinematic and thematic experience it delivered to the audience. Some OTT argue that a cinema experience does not hold feasible for the masses as it is so expensive. Not only does cinema provide an affordable form of entertainment but it also becomes a place where people from different backgrounds come and enjoy, irrespective of their differences. That ‘Joker’ (2019) could draw such a massive response was largely driven by the fact that it was enjoyed by the masses.

The major stakeholders in the eco-system of movies are audiences, producers, distributors, multiplexes, financiers, actors, technicians, among others. A mega budget movie is made of cinema goers who contribute towards ticket sales. And therefore, the film-makers will themselves try and oppose OTT platforms for releases as it hits hard on the ticketing revenue. ‘Fast and the Furious 9’ and ‘Sooryavanshi’ have delayed releases indefinitely – further asserting the financiers’ need to release a movie in a theatre first so that a certain monetary value can be derived from the material, that is, the reel.

One can also take respite in the fact that globally the box office has been rising recently with movies travelling to all parts of the world. We increasingly see movies from one part of the world being releasing and thriving at the box offices in many other countries globally. The record-breaking box office release of Oscar-winner ‘Parasite’ in western countries shows how cinema become a truly more globalised enterprise.

It is still hard to predict when the tide will turn back in favour of theatres and multiplexes. For now, they are aiming at sustenance and ideas are being thought of already for a post Covid-19 world. It will not be an easy journey back up for traditional cinema owners given the social distancing norms in place. However, one can also not negate its nostalgic popularity among the audience. Especially in rural areas where community-viewing is a norm, OTT platforms will find hard to penetrate into.

But for the rest of us, both types of cinemas serve their purposes and our convenience. All one can say for now is that OTT & Cinema Halls will continue to co-exist and thrive, probably for the lack of a better option.

Read what is the Most Popular Digital Content During Lockdown